Effective Ways To Keep Track Of Your Business Expenses
When you’re deeply immersed in day-to-day business activities, it’s hard to prioritize long-term profitability over short-term gains. This is especially true for startups that are working to generate awareness and scale.
However, sooner or later you may realize that the expectations of your company’s finances don’t quite match the reality. Therefore, professionals always recommend tracking your expenses for accurate bookkeeping.
Tracking Expenses? Here’s How
Keeping track of small business expenses doesn’t need to be very difficult. Here are some practices that can simplify the entire process:
- Use a receipt scanner to digitize all of your financial documents and receipts
- Integrate accounting software to centralize this information
- Maintain an exclusive business bank account and credit card
- Connect your bank account to your invoicing software to automatically import transactions
- Review your expenditures and repeat this process at prearranged intervals
Regularly checking your costs provides you with valuable and timely insights into foolproof versus flawed practices. Moreover, engraining this practice will help you make informed decisions, predict financial outcomes, and gain overall business clarity.
As you become more experienced, you’ll realize that robust recordkeeping helps you estimate upcoming costs without having to dive into all the details. With increased visibility, you can easily avoid under or overestimating your financial strength. You’ll also reduce the risk of being unable to cover unforeseen expenses.
Why You Need A Receipt Scanner
Sorting through the old and forgotten receipts is nothing short of torture. Matching receipts with the costs contained in your records can be a painstaking process and with ink fading over time, readability becomes another force to reckon with. Combine this with the threat of an approaching tax season, and you might land yourself in a menacing quagmire.
However, you can avoid all of this by simply enlisting the help of a receipt scanner. The scanner can digitize and file receipts as quickly as you collect them. After you instantly capture these documents with your device, staying organized and on top of outgoing funds is a breeze.
Utilizing Software Can Help
Wondering how to keep track of your business expenses with accounting software?
Accounting software integrates with your company’s existing systems to categorize and record receipts in a systematic manner. By digitizing and centralizing them, this solution grants inclusive access to anyone with permission from the same portal.
The most important aspect of this activity is proper expense categorization and labeling given that eventual reporting will depend on a carefully organized approach. For example, you should consider categorizing receipts collected during a business trip under ‘Business Tours & Meetings’. If necessary, you can add relevant details as a footnote under each document.
Have A Bank Account And Card That’s Just For Business
Creating a dedicated bank account is one of the most underrated practices when it comes to keeping track of business expenses. In reality, separating personal costs from your work expenses is a vital practice. This paves the way for easier and quicker expense management.
For incorporated organizations, a completely separate bank account is normally mandatory. For a business that’s not incorporated such as a sole proprietorship, owners should use a different personal bank account which can act as their company’s account.
Keeping a separate credit card is another one of the best ways to keep track of expenses for your business. When you keep business and personal transactions separate, it can shrink the labor involved in matching receipts to expenses and sorting them considerably.
Integrate Banking Data With Accounting Software
Greater automation is a proven strategy for unlocking value and shrinking costs. One simple way to facilitate greater automation is integrating banking with accounting software to seamlessly import transaction reports. Most accounting solutions are equipped with this functionality, helping you stay ahead of expense tracking.
When transactions are automated, it’s virtually impossible to miss making a payment or recording a transaction. This accounting solution outlines each transaction which can later be reviewed as an expense under the relevant heading. Not only does this make small business expense tracking less time-consuming, but also creates fewer opportunities for data entry errors to arise.
Keep Tabs On Your Business Expenses
We can’t stress enough the need for companies to constantly track and review their expenses and transactions. Even when you use software to track these costs for you, it’ll be up to you to evaluate them and plan accordingly.
You can draw up a plan that schedules weekly reviews of your financial standing as part of your regular organizational oversight. Most importantly, don’t get bogged down by receipts or charges you can’t account for. You can always circle back once you sort everything else.
The Bottom Line
Knowing how to track business expenses the right way is your one-way ticket to smoother workflows and scalability. The good news is that with all the digital accounting solutions now available, tracking payments and transactions is simpler and faster than ever before.